Caesars Entertainment CEO Tom Reeg has stated that he fully expects the upcoming Formula One Las Vegas Grand Prix in November to drive ‘Super Bowl-level activity’ for the operator in the city.
Speaking on Caesars’ earnings call for its fourth quarter results, Reeg also noted that he expects digital operations to positively contribute to adjusted EBITDA in 2023, and he gave an update on the operator’s New York casino project.
F1 to help Caesars’ Vegas operations in November
Reporting its Q4 results, Caesars declared revenues of $2.82bn, an 8.87 per cent improvement year-over-year (2021: $2.59bn), noting that its Las Vegas revenue grew by 10.96 per cent to $1.15bn (2021: $1.04bn), regional dipped slightly to $1.35bn (2021: $1.36bn) while digital doubled in size to $237m (2021: $116m).
Caesars’ Vegas operations had a strong quarter despite November being regarded as a slow month. However, Reeg does not think a slowdown will occur in 2023 thanks to the arrival of the Formula One Grand Prix on the Strip.
The CEO expects a five per cent or better lift on EBITDA during that period following ‘Super Bowl level activity’ at the operator’s venues in the city while Formula One is in town.
Reeg commented: “I’m expecting Super Bowl-level activity, if not stronger. But if you lost the Super Bowl in February, you’re still going to have a strong weekend.
“There’s obviously incremental lift from the Super Bowl. But when you’re talking about November, that’s our softest period of the year. So the lift is far more dramatic on a year-over-year basis.
“So yes, I’d be looking at for us something along those lines, five per cent or better in terms of EBITDA lift for the quarter that’s driven by that weekend.”
Positive digital EBITDA in 2023
Caesars’ adjusted EBITDA rose by 64.7 per cent to close the year at $957m (2021: $581m). Digital operations weren’t able to provide a positive contribution towards the overall adjusted EBITDA figure, but it did improve to a $5m loss (2021: -$305m).
Reeg believes digital operations will provide a positive contribution towards EBITDA later this year.
The CEO said: “We’re anticipating that digital, on a full-year basis, will be an EBITDA contributor for us this year. And when I say that, I’m talking about overall and both verticals, I expect sports betting and igaming to be EBITDA positive this year for us.”
Reeg noted he expects digital operations to generate $550m in EBITDA by 2025, and at least at that level for two quarters in 2024.
Eric Hession, President of Sports & Online Gaming, added that the introduction of a casino app will help digital operations reach a positive EBITDA contribution, as it will improve the customer experience. The operator will also be introducing new gaming content.
He stated: “The big change that we’re going to make is to have a standalone casino app. So right now, if you want to play on the casino, you have to go download the sports betting app and then find the casino icon, click on it and go through the casino.
“We’ll also be offering a casino app that then you can do the same thing and go back to the sports betting side, but it will be much easier to use from a customer perspective who’s looking just for the casino side.
“We’ll also be creating some branded live table games in the various states more so than we have right now. We’ll also be introducing the ability to do segmented and triggered marketing.”
New York casino project
Caesars also provided its investors with an update on its New York casino project during the call, as the operator hopes to open a venue with SL Green and Roc Nation in Times Square, Manhattan.
Reeg stated that the New York Gaming Facility Location Board will likely hand out the three available licenses by the end of the year, “but there’s a potential cut through the location boards of the various properties that’s upcoming in the next quarter or so”.
“We continue to believe we’ve got the project that will open the quickest. We’ll start paying New York, the tax is the quickest. It’s in an area that doesn’t need zoning approval,” Reeg added.
“Obviously, it is already tourist-focused but I can assure you, we are not going to be the one that wins because we built the biggest housing development outside of our casino.
“We’re going to win this on the merits of the property and how quickly we can get open and how well it fits into the local environment. If it becomes an arm’s race of who is going to spend the most money, we won’t win.”